US RPM sees feedstock costs flat to down for rest of 2013

22 July 2013 18:59  [Source: ICIS news]

HOUSTON (ICIS)--The top executive at RPM International said on Monday that the outlook for the US-based coatings and sealants firm’s raw material costs should remain fairly stable through the end of this year.

“We’re planning for and anticipating flat to slightly down raw material costs,” CEO Frank Sullivan said in an earnings conference call.

Sullivan said that there are cases where costs are going up, such as acetone, which is a major feedstock for RPM’s Rust-Oleum division.

And rising oil prices could also change raw material costs significantly if that trend persists, Sullivan added, but he said RPM is not planning on that likelihood.

“That’s our best guess at this point in time,” Sullivan said.

RPM on Monday posted a fiscal 2013 fourth-quarter net profit that fell by 21% year on year, though sales increased 6% year on year.

Sullivan continued to see tough times ahead for RPM’s roofing division and European businesses, which he said will continue to decline through the first half of fiscal 2014, with improvement in the second half of next year.

“When you dig a big enough hole, eventually people will stop digging,” Sullivan said. “The only region of the world where we have continued to see deterioration is in Europe.”

Sullivan added that recovery of the US economy remained “pretty tenuous”, though he said people were starting to remodel. RPM’s consumer segment showed robust growth because of the continued recovery in the North American housing market.

“I do think that consumers and homeowners are much more comfortable, they are spending more on their homes,” Sullivan said of consumers in the US. “I think in general we’re in a space market-wise that is growing … people are returning to normal levels of remodeling.”

By: Lane Kelley
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